As retirement approaches, the stakes often get higher. There’s no time for errors in judgment or money mistakes, which is why it’s so important to know what common errors and mistakes to look out for and avoid like the plague. Here’s a list of three common mistakes made with retirement funds.
1.Follow advice given at a seminar on topics you know little about
Many people tend to panic and want to know if there is any way they can increase their retirement funds using a quick fix solution. Many have attended financial seminars that will sell a really great sounding financial or investment idea that has left many with much less money than they began with or even worse, with nothing at all.
Industry professionals have seen it happen time and time again. It’s best to avoid seminars promising the world. On second thought, it might be best to avoid them altogether and seek out the advice of a professional—someone who will take the time to get to know their client’s personal goals and learn about their current financial situation.
Most of these seminars are taught by high-powered sales people who usually have no interest in knowing who people are and more interest in how much money desperate and unknowledgeable attendees are willing to hand over to them.
2.Dumping most or all retirement funds into stocks
Here’s another scenario many professionals have seen happen all too often, especially among those who are very close to retirement. These situations and decisions commonly result in people losing their entire retirement. Often, people believe that the stock market is the way to go, but don’t always know enough about it or how to invest period.
Investing isn’t bad, it’s just not recommended that anyone just dump their life savings into stocks they know nothing about. It is suggested that anyone thinking of investing their life savings close to retirement should at least consult with a professional investment advisor or planner to learn more about their options first.
3.Making risky investments using too much net worth
There are other types of investments to make, such as investing in or creating a company. Many investors will take most of their net worth and put it all into a risky investment and since there’s always a risk with investing of any kind, it’s probably not the best idea for a person to use most or all of their net worth to fund a high-risk investment. Most professionals recommend having a diversified portfolio for their investment strategy.
When it comes to retirement funds, it’s important to remember that the money has been saved for purpose: to provide a reliable and consistent retirement income. If a person is not careful, they could run the risk of losing everything for which they’ve worked so hard.
Looking for financial planning and retirement advice? Talk with one of Ethica’s financial advisor’s located in our Sunshine Coast office. Visit this page for more information.